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Radiance Capital Receivables Eighteen, LLC v. Concannon

United States Court of Appeals, Eighth Circuit

April 4, 2019

Radiance Capital Receivables Eighteen, LLC Plaintiff- Appellee
Dr. Matthew Jerome Concannon Defendant-Appellant

          Submitted: December 11, 2018

          Appeal from United States District Court for the Western District of Missouri - Jefferson City

          Before SMITH, Chief Judge, WOLLMAN and GRASZ, Circuit Judges.

          WOLLMAN, Circuit Judge.

         Eleven years ago, Matthew Concannon, M.D., signed a general guaranty for a company that he thought he owned in part with his trusted friend and financial advisor. What his friend purportedly failed to mention in this otherwise routine exercise of obtaining his signature was that the guaranty would saddle Concannon with millions of dollars in debt from loans that his friend had obtained and was unable to repay. Concannon urges us to conclude that he was defrauded by his friend, that his friend acted without his authority in delivering the guaranty to the bank, or that the bank's successor in interest, Radiance Capital Receivables (Radiance), lacks a proper chain of title to enforce the guaranty. The district court[1] determined that Concannon was liable, and we affirm.


         Concannon graduated from medical school at the University of Missouri in 1987. After training in hand and microsurgery, he returned to the University to join the medical school faculty. There, Concannon retained the services of José Lindner[2]upon the suggestion of a faculty mentor. Lindner served as a financial planner and tax preparer for several prominent physicians in the area. The two became friends, and Concannon enlisted Lindner to advise him financially, prepare his taxes, and generally assist with his various business ventures.

         Concannon left the University in late 2006, and Lindner assisted him in opening his own private medical practice shortly thereafter. Lindner handled the business's books and continued assisting with Concannon's tax and financial matters, including drafting and preparing the operating agreement for Concannon's holding company. Concannon trusted Lindner "more than [he could] describe" and gave Lindner complete access to his financial and business records. Concannon testified in an unrelated matter that, in his words, "I paid [Lindner] to act on my behalf. . . . As a matter of routine, I-when [Lindner] would give me stuff to sign, I would just sign it."

         Lindner also managed his own commercial real estate developments, one of which involved an entity named Providence Farms, LLC (Providence). Lindner offered Concannon an opportunity to obtain a dollar-for-dollar tax credit by investing in Providence and its various infrastructure construction projects, and Concannon agreed to invest $600, 000. Lindner handled Concannon's involvement with Providence and regularly sought his signature on related documents, including those purporting to add Concannon's holding company as a member of Providence with a 50% ownership interest. Concannon also signed guaranties permitting Lindner to obtain and renew, on Providence's behalf, millions of dollars in loans from various financial institutions.

         Concannon signed a general guaranty for Providence on January 24, 2008. The document listed Premier Bank as the lender and guaranteed all of Providence's "present and future debts" of "every type, purpose and description," including, "without limitation, all principal, accrued interest, attorney's fees and collection costs." Unbeknownst to Concannon, Providence teetered on the brink of foreclosure at the time, and various banks had required Lindner to obtain guarantors and investors to keep Providence afloat. In subsequent years, Concannon also made personal loans to Lindner at the latter's request to enable Providence to make its loan payments. Concannon insisted on collateral for one such $240, 000 loan in late 2009. Around that time, he attended two meetings between Premier Bank and Lindner, during which the bank informed Lindner that it needed payment on the loans.

         Providence did not make its loan or interest payments and defaulted. The company and its projects were a sham; Concannon did not receive a tax credit or a membership interest, and the infrastructure projects which he purportedly funded with his investments in Providence were never constructed.

         Premier Bank failed in 2010. The Federal Deposit Insurance Corporation (FDIC) took over its assets, which included the right to collect from Providence. The FDIC created the entity CADC/RADC Venture 2011-1 (CADC), which the FDIC owned jointly with a private investment company, and sold Premier Bank's assets to it. CADC obtained a consent judgment against Providence in Missouri state court in September 2014 for $15.7 million plus interest. Concannon had been dismissed as a defendant in the state action, and he did not object to the consent judgment. CADC then sold Providence's debt obligations to Radiance in May 2016 and thereafter executed and filed an Assignment of Judgment in Missouri state court assigning the consent judgment against Providence to Radiance.

         Radiance filed suit in federal district court against Concannon to collect the burgeoning amount owing from the consent judgment, which now approaches $22 million. Relevant here, Radiance claimed that Concannon breached his guaranty. The district court granted Radiance's summary judgment motion in part, concluding that Radiance had a valid assignment of Providence's debt. Following a bench trial in October 2017, the district court determined that Lindner had acted with Concannon's actual authority to deliver the signed guaranty to Premier Bank and that Concannon failed to establish a fraud-in-factum defense. The court ordered Concannon to pay the full amount owing on the consent judgment and granted Radiance's motion for ...

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